A slew of first-quarter results showed mixed results for Europe's mobile and integrated operators in the first quarter of 2011, as some continue to battle with the ongoing effects of the global economic crisis.
Telefónica, whose home market of Spain is struggling to emerge from its worst economic crisis in decades, saw its operating income before depreciation and amortisation, or OIBDA, drop 8.8 per cent to €5.08 billion in the first quarter. Analysts in a Bloomberg survey had predicted €5.23 billion. The company also suffered from the effects of users switching to cheaper mobile providers such as Yoigo and Jazztel.
According to Bloomberg, Telefónica's net income fell 54 per cent to €748 million in the first quarter. Earnings were hit by a charge for a writedown of the company's indirect 10.5 per cent stake in Telecom Italia. Although times are tough in Europe, Telefónica said it has no intention of pulling out of its European countries including Germany, the UK or the Czech Republic. However, it's clear that the company is looking to its operations in Latin America to boost growth.
Indeed, Telefónica's opposite number in Italy, Telecom Italia, enjoyed a 10 per cent increase in the first quarter profits thanks to growth in Brazil and Argentina. Domestic fixed-line and mobile revenue dropped 2.9 per cent to €3.24 billion and 1.7 per cent to €1.65 billion respectively in the first quarter.
"Results were broadly in line with expectations, but the performance of the domestic mobile division was the positive surprise," Bloomberg quoted Saverio Papagno, an analyst at AZ Fund Management in Luxembourg, as saying about Telecom Italia. Domestic mobile "is showing an improving trend, probably helped by a less aggressive pricing competition from other players."
Telecom Italia also said it has decided to start the process for the sale of its media operations in an attempt to focus on its core activities and slash its debt. Some reports also suggested the operator would invest €9 billion to develop its business in Italy over the next three years.
In a summary of other key first-quarter results this week, Deutsche Telekom provided a pleasant surprise for analysts by reporting earnings that beat analyst estimates, slowing a decline in revenue and increasing profitability at T-Mobile USA. EBITDA, excluding some items, slipped 0.1 per cent to €4.48 billion, while revenue dropped by a smaller-than-projected 1.1 per cent to €14.4 billion euros.
"The stabilisation in the adjusted EBITDA is astounding," Bloomberg quoted Wolfgang Specht, an analyst at WestLB AG in Duesseldorf, as saying about DT. "It's something special when a European operator doesn't report a decline."
Meanwhile, tough conditions in Eastern Europe and fierce competition pushed core earnings at Telekom Austria down nearly 9 per cent in the first quarter. The company maintained its 2012 outlook while swinging back to a better-than expected net profit of €46.9 million from a loss in the year-ago quarter hit by restructuring costs.
- see this Bloomberg article
- see this Dow Jones Newswires article
- see this separate Bloomberg article
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- see this Reuters article
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- see this separate Reuters article
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